Grand St. Apartment for $33K: Too Good to be True

A couple of weeks ago, the New York Daily News published a story that sounded just a little too wacky to be true. The paper reported that a Long Island woman had bought a one-bedroom apartment in the Seward Park Co-0p on Grand Street at a foreclosure auction for a mere $33,000 in May, only to have the co-op’s board reject the sale price as too low, prompting her to pursue legal action to keep her bargain.

As it turns out, the most outrageous part of the story was, indeed, not true: the price was off by 1,000 percent. While bidder Linda Salamon did enter into a contract to buy a foreclosed apartment from lender Chase Home Finance, the $33,000 was only a 10 percent down payment on a total purchase price of $329,000 – still a good deal for an apartment that would sell for at least $400,000 on the open market.

In an interview with The Lo-Down, reporter Barbara Ross called the error “a stupid mistake” and noted that as soon as one of her sources brought it to her attention, she corrected the online version of the story to reflect the accurate price in the headline and the article. However, the Dec. 1 original lives on in the paper’s archives, and various real estate blogs and other publications continue to make note of Salamon’s “$33,000 steal.”

The story as it appears today.

By contrast, a similar case that Salamon’s attorney, Richard Klass, is handling a few blocks away at the Hillman Housing Corp. has garnered no press attention. In that case, plaintiff Elena Slukina of Manhattan bid $180,000 on apartment #GD at 550H Grand St. in April, after the previous owner defaulted. Hillman is attempting to block that sale based on arguments similar to Seward Park’s, according to court documents filed in Supreme Court Sept. 16.

Meanwhile, Seward Park Co-op’s attorney, Art Weinstein, confirmed that the co-op did reject Salamon’s purchase price (the six-figure one). The board is moving toward acquiring the apartment, #607 at 210 E. Broadway, through the right of first refusal that is spelled out in the corporation’s bylaws. Weinstein expects to close the deal by the end of January, he said.

“Seward Park’s board felt that the offered contract price of $329,000 was too low, and the board is working with the bank that foreclosed to exercise its right of first refusal,” said Weinstein.

The board’s move is aimed at protecting the co-op’s interest, Weinstein said. Low sales prices result in smaller flip tax fees, which directly fill the co-op’s coffers, while the value of individual apartments and the co-op’s overall property value are damaged by low-ball anomalies in “comps,” which are examined by lenders during sales and refinancings.

“The board has very valid reasons for doing what it’s doing,” he said.

Salamon and her lawyer may have something more to say about that, however. Salamon filed suit Nov. 25 in New York Supreme Court, naming Seward Park Housing Corporation and Chase Home Finance as defendants in her effort to secure the apartment.

In essence, her complaint alleges that Seward Park’s right of first refusal applies only to voluntary sales, not to foreclosures, and asks the court to nullify the co-op’s decision to reject her purchase. Failing that, she wants her $33,000 deposit back.

Weinstein said Thursday afternoon that he could not offer a response to any legal action because he had no first-hand knowledge of it as yet. Klass explained that it can take up to a month for paperwork to be served on the opposing party in a lawsuit, and that he expects the two sides will be talking soon.